Business Directories

BASF to set up $1.4bn petchem plant in US

Washington, May 3, 2014

BASF, the world's biggest chemicals company by sales, said it could spend more than one billion euros ($1.4bn) to build a petrochemical plant in the US, joining global peers attracted by cheap shale gas there.

Natural gas is about three times cheaper in the US than in Europe, encouraging BASF to redirect investment away from its home region, which still accounts for more than half of group sales.

The planned plant on the US Gulf Coast - which would be BASF's largest investment in a single facility - would convert natural gas into propylene, a key building block for advanced materials such as insulation foams, lubricants and superabsorbents for diapers.

BASF is seeking to curb its reliance on suppliers of propylene as more in-house production will give it flexibility to make more advanced products that need propylene as input, finance chief Hans-Ulrich Engel said.

The German firm announced the possible US investment along with first-quarter results. Operating profit fell three per cent as a decline in foreign currencies against the euro - which lowered the value of revenue from overseas markets - offset higher sales volumes of farming pesticides and precursor chemicals.

BASF said it was still in the early planning stages for the American plant, and gave no time frame, but it has a track record of following through with big investments after going public with proposals.

"We are currently in a net buyer position for propylene. That's the key driver for considering an investment," Engel said.-Reuters